He explained that on the day Sears released the news, the market viewed it as “some form of zombie REIT” that manages property and collects fees from other retailers.

At the heart of the matter, Sozzi said the company’s retail operations are in shambles. In addition to the negative sales pre-announcement, he explained that the retailer’s SEC filing revealed that its cash burn was quicker this year compared to last year’s holiday season.

“To me, that’s very disturbing,” he said.

He also said he thinks this announcement is merely the company saying it has the potential to raise money with the new REIT form.

“And if they didn’t come out and signal this to the stock market, I think you would have the market looking at a retail operation business that is just not generating cash and remains in a very worrying fundamental state,” he added.

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